Opinion: 5 cheap stocks under $10 even high-rollers might like

From a mathematical perspective, share price doesn't really matter. Whether a public company has 1 million shares valued at $1,000 or 100 million shares valued at $10 apiece, its total market value is still $1 billion.

Still, investors are often psychologically drawn to "cheaper" stocks. Whether because they prefer to buy round lots or higher quantities of shares, or simply because they fool themselves into thinking it's easy for a $5 stock to rise 50 cents for a quick 10% gain, there's no shortage of commentary out there for stocks that trade at single-digit prices.

There are obvious risks here, of course. Many low-priced stocks have fallen hard for good reason. And worse, the SEC warns that cheap stocks are often ripe for scams or manipulation as they can be less liquid and lack the same scrutiny as well-followed blue chips.

Oh yeah, and let's not forget that "expensive" stocks tend to do just fine. Case in point: Amazon.com
AMZN, +0.34%
, which was at $500 a share the start of 2016 and has tripled in about three years, obliterating the 50% return for the S&P 500
SPX, +0.70%
in the same period.

But if you're the kind of investor who is convinced cheap stocks are best despite evidence to the contrary, then go to town. Here are five stocks under $10 that seem to have some substance behind them, and may be worth a look if you're in to cheap stocks.

1. Kandi Technologies Group

Chinese automaker Kandi Technologies Group Inc.
KNDI, -1.62%
is one of those names that has been bandied about for years as a small-cap stock on the verge of a massive breakout. It's easy to see why, as Kandi's core business has long centered around electric vehicles. Given the breakout of Tesla Inc.
TSLA, -0.45%
on the EV craze, along with Kandi's presence in the high-potential marketplace of China, what's not to like?

Well, reality, for one thing. The EV boom never transpired and in fact Kandi has seen plenty of revenue pressures — particularly policy changes around government subsidies that caused demand to dry up for several electric vehicle models. Revenue has remained down sharply from company's 2015 peak, and shares are down about 50% or so as a result.

However, Kandi was just approved to import its EVs to the U.S. and the stock surged close to 35% in a single session on Wednesday after the news was announced. One headline does not a long-term trend make, but there has been a lot of interest in this stock for years in anticipation of just such an event, so now may be the time to get in before shares, which closed Wednesday at $7.98, surge higher. It's a high-risk, high-reward trade — but as Tesla showed with its volatile but impressive run, bold investors can really make a mint if they are early to a trend like this. If you like stocks under $10, you may not have much longer to buy KNDI at single-digit prices after this news.

2. Diebold Nixdorf

A company with an interesting past, Diebold Nixdorf
DBD, +1.74%
was built on old-school banking technology from vaults to vacuum tubes to ATMs. However, the past decade or so has been challenging as consumers have moved away from cash and traditional banks and Diebold was mired in scandal as execs were charged with accounting fraud by the SEC.

Due in part to these trends and a series of big acquisitions that didn't really pan out, shares are down about 80% compared with five years ago. However, in 2018 Diebold Nixdorf finally managed to wholly acquire Germany's Wincor Nixdorf and restructure the business into a leaner and more efficient entity. That progress in concert with upbeat earnings in February that showed 10% order growth and better-than-expected revenue growth caused shares soared more than 10% in a single session after its fourth-quarter 2018 report.

As with many stocks under $10, Diebold Nixdorf has its shortcomings. But most analysts following the stock expect a return to profitability in fiscal 2019, and newly appointed CEO Gerrad Schmid has bolstered shareholder confidence. Diebold Nixdorf shares have more than doubled so far this year as a sign of increasing optimism, so now may be a good time to give this cheap stock a look as the turnaround gains steam. And with a P/E of about 10 to match its low share price, DBD, at about $8.50 a share, is cheap in more ways than one right now.

3. Avon Products

Another embattled company experiencing an uptrend is Avon Products Inc.
AVP, -1.94%
. This 130-year-old beauty-products brand has struggled to remain relevant as new brands have connected better with consumers, while e-commerce options make it easy for someone to shop for products online instead of dealing with pitches from an Avon rep. Revenue peaked in 2011 at $11.3 billion and finished fiscal 2018 at under $5.6 billion.

Things are projected to be ugly again for Avon in 2019 from a revenue perspective, with another small decline in the top line. But Avon stock seems to have stabilized since its mid-2018 lows as management seems to have finally engaged with this prolonged problem. Investment in digital tools and distribution with a focus on end customers as well as its army of representatives has sparked optimism on Wall Street. Avon is also investing in its people and revising promotional strategies as well as launching its new Espira product line with a health and wellness focus. Throw in a plan revealed in January to slash costs and create a leaner, more profitable business and you can see why some investors are optimistic.

Avon may never return to its former glory or its share price of $30 as recently as 2011. But this stock, currently at around $3 a share, has roughly doubled in 2019 so far on hopes of brighter days ahead, and AVP may have more room to run.

4. Snap

Though Snapchat parent Snap Inc.
SNAP, -0.50%
only has about two years under its belt as a publicly traded company, it's safe to say this stock is another cast-off that has spent its share of time in Wall Street’s gutter. Snap went public at $17 a share about two years ago, but after a brief pop the shares slumped below that mark in June 2017 and pretty much never looked back. Now the shares trade just above $9 — roughly a third of their all-time-high post-IPO, and about half of the original offering price.

The challenges have been significant, including a tone-deaf CEO irritating Wall Street in early earnings calls and a failed platform redesign that turned off once-loyal users. And at its core, Snapchat is still unprofitable and overreliant on younger users who are less valuable to advertisers.

All that being said, Snap’s promise is real. Keep in mind that at the time of its IPO, some Wall Street projections plotted $2 billion in annual revenue. Snap is taking some time to get there, but is expected to hit $1.5 billion in revenue this year after 30% year-over-year growth and another 30% in fiscal 2020 to hit that $2 billion target. Furthermore, Snap has been investing aggressively in R&D, with $1.5 billion spent on research in 2017 and another $772 million last year to ensure it keeps that momentum.

This company surely has had its stumbles, but remains incredibly relevant and full of potential. Wall Street seems to be noticing this, too, judging by the fact that SNAP stock has almost doubled from its December 2018 lows.

5. Barnes & Noble Education

Not to be confused with better known retail bookseller Barnes & Noble Inc.
BKS, -1.71%
Barnes & Noble Education, Inc.
BNED, -1.04%
was spun-off in 2015 in an effort to create a targeted textbook company serving students, educators and institutions.

The spin-off wasn't a terrible idea, but it certainly wasn't a guaranteed success. The college textbook game is far from a safe business, with low growth and low margins in the existing marketplace and serious threats of disruption either from digital natives or through grassroots efforts to blow up the textbook business given questionable practices such as "access codes."

Still, Barnes & Noble Education plods along. With the acquisition of digital bookstore MBS in 2017, the education company has bolstered its e-textbook business and continues to evolve its cloud-based course material and Digital Study Solutions software.

Shares have been stuck in a rut since 2018, trading currently at about $7, but a huge rally of more than 70% from its December lows suggests that Wall Street thinks the worst is behind this stock. With a forward P/E of just 13, the stock is cheap from a traditional valuation perspective as well.

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